Small-, Mid-Sized Agencies Ambivalent About Programmatic: Cite Lack Of Unified Definition

While Madison Avenue’s biggest agencies have embraced programmatic media buying as the next big thing, the jury is still out among the longer tail of the advertising industry. The vast majority (94%) of smaller and so-called mid-tier agency executives say they either don’t trust or are undecided about the validity of buying media through programmatic exchanges, according to findings of a quarterly survey conducted by agency data processing and software developer Strata.

The findings come as stark contrast to the sentiment of big agency holding companies, which have invested deeply in technology and infrastructure -- including the creation of dedicated “agency trading desks” -- in an effort to shift from direct buys with media companies to machine-based buys negotiated via programmatic media exchanges.

This data tells us that there’s some uncertainty in this space and that there’s not a full buying from advertising agencies yet,” says Joy Baer, executive vice president and COO of Strata, who shared the data exclusively with RTM Daily.

Baer said the findings are the first to benchmark the sentiment of Madison Avenue’s long-tail -- the small- to medium-sized agencies that are the core clientele of Strata’s media-processing systems. She estimates that while the sentiment of the Strata agencies is very different from the view of big agency holding companies, it is not inconsequential in terms of influencing the marketplace, estimating that the agencies utilizing Strata’s systems represent about 30% of total media spending.

“We don’t deal with the agency holding companies,” she explained, describing Strata’s clients as “ large regional agencies, independents and [scaling] all the way down to the smaller shops.”

One of the biggest issues Strata discovered wasn’t just trust in programmatic media-buying, but defining what it actually is. Baer noted that many of Strata’s agency clients may be utilizing programmatic buying -- paid search of Google display as examples -- without even realizing they’re doing it.

That said, the vast majority of respondents (58%) said they didn’t believe there is a “unified” industry definition for the term.

Strata Agency Survey On “Programmatic Buying”

Trust Programmatic

6%

Undecided

37%

Don't Use Programmatic

46%

Programmatic Lacks Unified Definition

58%

Source: Strata Agency Survey. Based on a survey of 75 smaller and mid-tier agency executives fielded Dec. 20, 2013 - Jan. 15, 2014.
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7 comments about "Small-, Mid-Sized Agencies Ambivalent About Programmatic: Cite Lack Of Unified Definition".
  1. Michael Hubbard from Media Two Interactive , March 10, 2014 at 9:50 a.m.
    As a small agency who embraced programmatic about 2 years ago, my take on this article is that you surveyed 75 agencies who just don't understand programmatic, or haven't been able to make the commitment to understand it (possibly due to resources). If there is a trust issue, it's because they are running exclusively via a DSP and not asking for the transparency, but if they made the financial commitment to a trading desk, there would be no trust issue. Transparency is the number one reason we went it alone rather than allow a networks black box algorithm to make all of the decisions. To that point - I guess that's why 58% also say Programmatic lacks a unified definition. FYI - programmatic is nothing more than the automation of the buying/selling process. I think confusion is probably when you start to break down all the different ways you can actually automate the process (RTB, DSP, DMP, etc). I sure hope people don't read this article and think all small agencies don't get it... There are a number of us who live for this stuff!
  2. Jeff Pugel from Vladimir Jones , March 10, 2014 at 10:07 a.m.
    Well said Michael. I'd also take it a step father and ask those same agencies just exactly how they're planning and buying their current media. Are they doing it themselves or via a 3rd party? I've found that many small-to-mid tier agencies just outsource their digital work and rely upon others to do it for them, not knowing exactly where/how their digital plan is being executed.
  3. Nate Carter from eEffective , March 10, 2014 at 11:14 a.m.
    Smaller agencies need to get on board or risk losing their clients. With massive sales hiring going on at big ad networks and the growing number of DSP's focused on selling client direct, mid-market shops risk their largest clients going all in with a programmatic vendor and shifting budgets away from the AOR. That said there is a great opportunity for growth for the adapters who can find the right partners to help walk them through the process.
  4. Patrick "Cob" Burton from Prosperio Systems , March 10, 2014 at 3:01 p.m.
    Michael, very well put. As a noob in the industry, working for a small ad tech start up working directly in the programmatic (direct/premium/guaranteed, what is the nomenclature!?), the jargon involved in this media buying landscape is mind bending. I agree that the cleanest definition of programmatic is automated - taking what was an RFP, excel sheet laden process, and streamlining it.
  5. Vipul Mistry from Intermarkets , March 10, 2014 at 4:31 p.m.
    If those stats are correct -- that's some pretty scary stuff. These agencies are ignorant of all the things that are changing in the marketplace.
  6. Dave Martin from Ignited , March 10, 2014 at 5:33 p.m.
    This is another trend that is getting way too much attention. The fact is that inventory (and how it is purchased) is not what makes a campaign successful. What makes advertising work is a breakthrough idea (especially in our world where consumers have learned to ignore any ad we put in front of them). And there is no marketplace or automation for breakthrough ideas. We should stop talking about the cost of the media and instead talk about the value of advertising.
  7. Mike Deez from EA , March 19, 2014 at 4:27 p.m.
    Take a bow Dave M.!